SureWest posts profit on cost reductions

SureWest Communications today announced that it will launch HDTV over its IP-based television platform in the third quarter, becoming the first U.S. telco to do so, said Brian Strom, president and chief executive officer.

“It has always been our goal to be on the leading edge of technology,” said Strom. "Our customer base has responded positively to our service offering."

SureWest is providing IPTV service over both a fiber-to-the-premises network it is building in three California communities and the DSL network it operates within its original franchise territory in Roseville, Calif.

The HDTV announcement came as SureWest announced its second quarterly profit in a row, based in part on cost controls, as well as reduced losses for its broadband unit.

The company earned $2.15 million, or 15 cents a share, up from $1.56 million, or 11 cents a share, from the second quarter of 2004. SureWest reported net income of $2.1 million, up 38% and income from operations up 30% to $4.9 million. The company’s revenues from its fiber optic broadband buildout were $12.1 million, up by $2.4 million. SureWest’s wireless revenues were up almost $1 million to $8.5 million and its operating EBITDA was up $3 million to $18.3 million.

“Our cost-cutting initiatives are yielding very positive results, as we anticipated, and SureWest is reporting another solid quarter for 2005,” commented Strom. “Our growth businesses continue to reach new milestones, with double-digit subscriber growth in the Wireless and Broadband segments and more than 80,000 marketable homes on our fiber network.”

SureWest is achieving 22% penetration of homes in the areas where it has built it FTTP netweork, Strom said.

“We are currently focusing on areas where we expect to be most fruitful and we are very pleased with our penetration,” he said.

SureWest is building its FTTP network outside its Roseville community in nearby towns of South Placer County, Sacramento and Elk Grove and is competing with SBC, Comcast and Citizens in those areas.

The company was able to grow its revenues on essentially unchanged expenses based on a cost-cutting program that included job cuts through an early retirement program, consolidation of billing systems and reorganization of internal functions for greater efficiency, said Philip Grybas, SureWest's chief financial officer.

SureWest reduced its employee rolls by 9%, Strom said. The company cut its operating expenses per wireless subscriber by six percent and per broadband RGU by 20%.

“EBITDA improvement will continue to be our leading goal,” he said.